April 23, 2012

Nonprofits need to get it together

Many are in a deep financial hole, yet precious few can talk
straight to their funders about their problems.

Compounding the communications gap, many boards do not understand
their nonprofits’ expenses, and far too few use their connections to help their
nonprofits raise money.

Those are some of the findings from a new survey by the
Nonprofit Finance Fund that offers a grim view of the way nonprofits are faring
in the stricken economy.

Among over 4,600 nonprofits surveyed, for example, 85
percent saw rising demand for services in 2011, 88 percent expect greater
demand this year, and 57 percent have only enough cash on hand to last three
months or less.

Among human-services organizations, which represent 38
percent of nonprofits surveyed, 58 percent could not meet demand in 2011, and
60 percent said they would not be able to meet demand in 2012.

The charitable marketplace is consumed with big talk about the
need for transparency, yet many nonprofits, along with their boards and their
funders, operate with their heads in the sand.

Nonprofits’ survival depends on their ability and
willingness to communicate more honestly and openly with their funders, while
educating their boards about their finances and enlisting them in the fundamental
job of fundraising.

For their part, boards need to take their governance and
fundraising responsibilities seriously.

Instead of sleeping through board meetings and
rubber-stamping whatever the staff puts in front of them, boards need to ask
tough questions about the financial health of the organization.

And they need to step up and do a lot more to use their
connections to help raise money for their nonprofits.

Funders also need to do more, both in providing the
operating and capacity-building support nonprofits need, and also in
establishing the trust that is essential if they expect nonprofits to talk openly
and candidly about their financial and operating problems.

If nonprofits, boards and funders do not wake up soon,
nonprofits will continue to struggle, leaving as victims the clients who count
on them to provide the programs and services they need more than ever in our
shattered economy.